U.S. food and ag exports might suffer if the government denies 45Z tax credits to foreign feedstocks used in making sustainable aviation fuel, said Agriculture Secretary Tom Vilsack on Tuesday. The Biden administration intends to issue regulations for the tax credits, worth up to $1.75 a gallon, before leaving office in January, Vilsack told a biofuels group. “I’m confident that we’re going to get her done.”
Farm groups and allies in Congress say the credits should be available only to U.S. feedstocks.
“It’s a tough issue,” responded Vilsack when Emily Skor, president of the trade group Growth Energy, raised the question, “because if you essentially create some kind of significant restriction in the efforts of trying to protect commodities and items that are grown and raised here, you essentially invite the entire world to do the same thing.” The consequences might apply to exports of U.S. grains, meat, or ethanol, he said. “Are you okay with that?”
Vilsack said “the real answer” in writing 45Z regulations was to assure feedstocks meet expectations. For example, used cooking oil is eligible, but newly pressed vegetable oil is not. “So that gets into inspections and gets into certifications.”
As part of the administration’s work on 45Z regulations, the USDA is looking at farming practices that reduce the carbon intensity of crops and could be eligible for a share of the credits. The 45Z credits are available for sustainable aviation fuels (SAF) with greenhouse gas emissions that are at least 45 percent lower than petroleum-based jet fuel. The administration has a goal of increasing SAF production to 3 billion gallons by 2030.